Nearly three years after the U.S. Supreme Court's controversial eminent domain ruling in Kelo v. City of New London, Connecticut, 125 S.Ct. 2655 (2005), the backlash against the ruling continues. Throughout the country, private property advocates rallied against Kelo. Since Kelo came down in 2005, nearly 40 states have reformed their eminent domain laws to specifically address the Court's holding. Despite this wave of opposition, California has yet to enact strong responsive legislation. In November 2006, Proposition 90, known as the "Protect Our Homes Act," was the first anti-eminent domain proposition to appear on the California ballot. Prop. 90 narrowly missed becoming law when it received 47.5% of the 50% of votes needed to pass. However, that may change on June 8, 2008, when two rival propositions, Prop. 98 and Prop. 99, appear on the California ballot.

Proposition 98: "California Property Owners and Farmland Protection Act"

The first measure to be approved for the June 2008 ballot is Proposition 98, which is entitled the California Property Owners and Farmland Protection Act. Co-sponsored by the Howard Jarvis Taxpayers Association and the California Alliance to Protect Private Property Rights, Prop. 98 has drawn new attention to the eminent domain debate. While Prop. 98 would place broad new restrictions on governments' ability to exercise eminent domain, the most controversial provision is its prohibition on rent control ordinances throughout the state.

The primary provisions of Prop. 98 are as follows:

Broad Definition of "Private Use"

Prop. 98 places considerable new restrictions on governments' ability to exercise eminent domain. Though seemingly innocuous, Prop. 98 prohibits the taking of private property for "private use." However, Prop. 98 then defines "private use" so broadly that the measure would explicitly prohibit all of the following:

• The transfer of private property to any person or entity other than a public agency or a regulated public utility;
• The transfer of private property to a public agency for the consumption of natural resources or for a substantially similar use as that made by the private owner; and
• The regulation of the ownership, occupancy or use of privately owned real property or associated property rights in order to transfer an economic benefit to one or more private persons at the expense of the property owner.

Opponents of the measure argue that by first prohibiting the taking of private property for "private use," and then defining "private use" so broadly, Prop. 98 would prohibit the exercise of eminent domain for traditionally accepted uses, such as: charter schools (which are generally not public agencies or regulated public utilities); public water projects (which involve the consumption of natural resources); and land use restrictions, zoning ordinances and environmental regulations (which are generally used to balance competing interests, such as between residential and commercial groups and thus inevitably result in the transfer of some economic benefit to one group over another).

Prohibition on Court's Deference to Government Agencies

Prop. 98 specifically instructs courts to use "independent judgment" when considering a property owner's challenge to the taking of his or her property and prohibits deference to the findings of the government agency.

Expansion of Just Compensation

Prop. 98 redefines "just compensation" to increase the amount that property owners could recover from the government when their property is taken. Under the new definition, property owners would be entitled to recover full reimbursement for temporary business losses, all relocation expenses, business reestablishment costs and "other actual and reasonable expenses incurred . . . ." Additionally, the measure would award attorney fees and costs for a successful challenge to an eminent domain taking.

Proposition 99: "California Homeowners and Private Property Protection Act"

The second measure on the June ballot, which was proposed as an alternative and in direct response to Proposition 98, is Proposition 99. Prop. 99 is entitled the California Homeowners and Private Property Protection Act and is backed by the League of California Cities and the California Redevelopment Association. This measure appears to have more support going into the June election.

Proposed as an alternative measure to Prop. 98, Prop. 99 is narrowly tailored to prohibit the controversial taking of private property sanctioned in Kelo, i.e., the transfer of an occupied home from one private person to another. Specifically, Prop. 99 would prohibit the use of eminent domain to take an owner-occupied, single-family residence (such as a home, condominium or townhouse) to transfer that property to another private owner (such as an individual, association or developer). The measure defines "owner-occupied" as the owner's principal place of residence for at least one year.

For Further Information

If you have any questions about this Alert or would like to learn more about eminent domain and redevelopment laws, please contact George J. Kroculick or any of the other attorneys in our Eminent Domain and Land Valuation Practice Group.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.